Correlation Between ConocoPhillips and EOG Resources
Can any of the company-specific risk be diversified away by investing in both ConocoPhillips and EOG Resources at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining ConocoPhillips and EOG Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ConocoPhillips and EOG Resources, you can compare the effects of market volatilities on ConocoPhillips and EOG Resources and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in ConocoPhillips with a short position of EOG Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of ConocoPhillips and EOG Resources.
Diversification Opportunities for ConocoPhillips and EOG Resources
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ConocoPhillips and EOG is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding ConocoPhillips and EOG Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EOG Resources and ConocoPhillips is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on ConocoPhillips are associated (or correlated) with EOG Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EOG Resources has no effect on the direction of ConocoPhillips i.e., ConocoPhillips and EOG Resources go up and down completely randomly.
Pair Corralation between ConocoPhillips and EOG Resources
Assuming the 90 days horizon ConocoPhillips is expected to generate 2.38 times less return on investment than EOG Resources. But when comparing it to its historical volatility, ConocoPhillips is 1.04 times less risky than EOG Resources. It trades about 0.01 of its potential returns per unit of risk. EOG Resources is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 10,636 in EOG Resources on August 30, 2024 and sell it today you would earn a total of 1,944 from holding EOG Resources or generate 18.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ConocoPhillips vs. EOG Resources
Performance |
| Timeline |
| ConocoPhillips |
| EOG Resources |
ConocoPhillips and EOG Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ConocoPhillips and EOG Resources
The main advantage of trading using opposite ConocoPhillips and EOG Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ConocoPhillips position performs unexpectedly, EOG Resources can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in EOG Resources will offset losses from the drop in EOG Resources' long position.| ConocoPhillips vs. Alibaba Group Holding | ConocoPhillips vs. WOODSIDE ENE SPADR | ConocoPhillips vs. Woodside Energy Group |
| EOG Resources vs. Alibaba Group Holding | EOG Resources vs. WOODSIDE ENE SPADR | EOG Resources vs. Woodside Energy Group |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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